Rockhopper Exploration (“RKH”) is an AIM listed company involved in the exploration of oil & gas in the Falkland Islands. The company has licences to explore in the North Falklands Basin where it has discovered oil at its 100% owned Sea Lion prospect.
Goldman Sachs has just released a 640p PT valuing the Sea Lions P50 reserves (assuming volumes of 205m barrels and a 60% chance of success) at 360p per share, a 50% premium to the current share price. Thus, on top of this discount to NAV, the risked exploration portion of the portfolio is effectively in the share price for “free”. With potentially substantial exploration/appraisal activities, M&A attractions and the market not fully appreciating the value accretion of pushing Sea Lion to commerciality, Goldman’s view the risk/reward as attractive and have the stock on their Pan-Europe Conviction Buy List.